NEO Explained for Beginners

written by David AmoyalPublish date: 01/10/2018(Last updated: May 17, 2018 03:54 PM)

Share

NEO, formerly known as AntShares, is often referred to as “The Ethereum of China”.

Founded in 2014 as non-profit, it “utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a ‘smart economy’ with a distributed network.”

Summed up, NEO aims to tackle the way trade is currently conducted. The “smart economy” the website refers to is the uber-enhanced version of our current economy, in which processes are conducted at maximum efficiency and productivity and cutting out the middleman.

Article Summary

How NEO Works

NEOContracts

Advantages of NEO

Buy and Trade NEO

Store NEO

Conclusion

How NEO Works

As stated before, NEO’s goal is to bring digital assets, a digital identity, and smart contracts to work to further the dream of a “smart economy”.

Digital assets are intangible assets that are fashioned in the manner of electronic data. The blockchain technology protocol utilized allows for this to be trustworthy and safe through transparent, identifiable transactions with secure digital identities (individuals, corporations, etc).

In greater detail in the next subsection is the smart contract component, as it is by far the most fundamental feature surrounding NEO.

Advantages of NEO

Developer flexibility: Neo uses pre-existing languages such Java, Go, C++, etc. (Ethereum created its own language), making it easier for developers to understand the blockchain. With Ethereum, developers must learn a new language.

Security: Neo is backed by the Chinese government, while Ethereum is not backed by any government.

NEO is more sustainable: it uses the dBFT while Ethereum uses a more energy consuming, higher cost POW mechanism.

NEO is quantum proof, Ethereum is not: the rise of quantum computers is said to bring along its ability to break the complex cryptographic codes, potentially destroying the premise of trustworthiness cryptocurrency is based on.

Smart contracts are unique computer codes built into the blockchain protocol that nodes follow to execute then update the ledger. Following “if-this-then-that” logic, it executes actions once pre-existing requirements are filled.

A good way to think of them is “self-executing contracts”, in which a new task will start when another task is completed. An often compared real-world example to a smart contract is a vending machine. Let’s say you walk up to a Coca-Cola machine, and the cokes cost $1.

Put in $1 for a soda (if this occurs)

Soda comes out (then that occurs)

Similar to vending machines, a smart contract is controlled by a computer program that handles digital assets. There is no person physically there by the machine confirming you put in the $1 for that soda then hands you a soda.

As well, in the smart contracts case, the computer controls the digital asset, not a person. Today, we most often rely on suggestions from computers what to do with our digital assets, meaning we are still giving a human intervention to complete tasks.

The smart contract bypasses this extra step by following set guidelines encrypted in the code. As such, its protocol gives way for users to build smart contracts and decentralized applications on its blockchain. Below is a graphic example of how smart contracts can be utilized in the real world, such as buying/selling a home.

How to Buy and Trade NEO

There are many ways to purchase NEO tokens. If you are starting out, one method is to go to Coinbase or Bitstamp use a card or wire transfer to purchase either Ethereum or Bitcoin.

The next step is to deposit the coins onto your personal exchange wallet on a site that facilitates the trading of NEO, such as Binance, Bittrex or Bitfinex.

Once time has elapsed and the deposit is complete, go to the trading platform on the site, such as Binances “basic” exchange section. On the right-hand side, type in NEO and pair it with the coin you deposited into your exchange wallet. Type in the amount you want to buy (located in the bottom middle of the page) and click Buy NEO. And there you have it! Now you are the owner of your very own NEO token(s).

At the time of writing, the price of NEO was $65.96 with a circulating supply is around 65,000,000. 100,00 is total supply, all we will ever see. The NEO team started out owning 50% of the total supply, meaning only 50,000,000 were in circulation.

While this may seem a bit sketchy to investors, the teams logic behind its distribution makes sense. To pay for the core team of developers, they slowly release the coins onto exchanges and use the profits to continue funding the project until it is viable economic ecosystem is established.

NEO has had a fantastic run these past few months, appearing relatively stagnant before the month of June. Represented in the green line, it has appeared much more stable than its predecessor Bitcoin as it continues its upward spiral.

How to store NEO

Here a few wallets with mass adoption to make your search for the right wallet a bit easier:

Conclusion

The NEO team has a very ambitious project on its hands backed by a core team of developers. Considering it’s been around for multiple years, it is clear that is not just another “pump & dump” currency out there to exploit traders. As well, since it was one of China’s first digital currencies to experience mass adoption, it gives it that household name brand advantage that relates to Bitcoins vast reputation.

With unlimited possibilities NEO can bring to the table, including decentralizing payment systems to avoid fees associated with costs of transactions on Paypal, bringing presidential voting online, streamlining supply chains such as those used by complex supply chains like FedEx, and self-executing insurance payouts, it is not unreasonable to see a success story in the works. However, this is in no way financial advice and one should use caution when investing.

Stablecoins are cryptocurrencies with a fixed price. Most of them peg, or attach, the price of the cryptocurrency to a fiat currency such as the dollar. This is in contract to most cryptocurrencies which are known for their price volatility.